Once upon a time _ say, the year before last _ a company making a 20 percent return on equity was among the elite. A Wal-Mart Stores or a Coca-Cola could obtain the mark, but precious few others.

Now, it seems, the club is open to all. In the first quarter, the average ROE of the Standard & Poor's 500 companies hit 20.12 percent. This figure (hot off the calculator from Salomon Brothers) represents the highest level of corporate profitability in the postwar era, and probably since the latter stages of the Bronze Age.

If the 20 percent figure means what it seems, then it is truly historic, akin to the average ballplayer hitting .350. Perhaps it will endure, in which case finance textbooks will be rewritten. More likely, American businesses will revert to the mean, in which case the boom in corporate profits won't last forever and might end tomorrow.

Historically, it has been very hard to maintain an ROE above the low teens for long. At 20 percent, it would appear that profits are benefiting from an unusually happy alignment of stars, such as a falling dollar, low inflation, continued growth, zero wage pressure and across-the-board cost cutting. As the auto industry is discovering, stars don't stand still.

ROE, keep in mind, is no inconsequential yardstick. It is the intrinsic measure of profitability: how many cents of after-tax profit on each dollar of shareholder equity.

Until recently, this number varied little. In 1977, a Fortune essayist (investor Warren Buffett) noticed that the ROE of corporate America had been ``stuck at 12 percent'' for decades. There was good reason for this. Any company that topped it had to reinvest ever-larger sums at the same rate of profitability or its ROE would fall.

At 20 percent, a company doubles its profits in four years and sextuples them in 10 years. With capital expanding at such a fearsome rate, few can find attractive places to put it. (Even a Wal-Mart runs out of unstored terrain.) Thus, ROEs return to Earth.

ROEs did rise in the 1980s, when companies leveraged their equity by adding borrowed money to it. The leveraging trend has since flattened; why not the surge in ROEs?

At least a partial answer is that company after company has written off obsolete workers and plants. Mobil Corp. just took its second big write-off in as many years.

Corporate bean counters are well aware that such tactics will juice their ROEs. In one convenient stroke, they take a big hit to earnings; then, their books show a lower shareholders' equity, or book value, forever. When the ROE calculation is made, the ``equity'' in the denominator is smaller.

Byron Wien, who is paid to reflect on such matters for Morgan Stanley, says, ``There have been tremendous charges taken against book value. So book is tremendously understated. It just doesn't mean anything.'' If that were so, an ROE of 20 percent would be no big deal; indeed, it could become the mark of mediocrity. One could then envision corporate boards of the not-too-distant future dismissing slothful CEOs for mustering ``only'' 15 percent.

Mr. Wien doesn't quite believe that. To vaporize (``write off'') equity overnight is an accounting fiction. Often, the corporate charge-taker is recognizing a deterioration in asset value that actually occurred in the real world over a span of years. The company would have given a truer picture of its business had it depreciated more of the asset all along _ which means that, in an economic sense, previous ``earnings'' were not really as high as reported. Thus, though the current ROE may be juiced, previous ROEs were inflated as well. So in relative terms, the current ROE is still high.

Book values also took a big hit in 1992, when companies changed the way they account for health benefits of future retirees. But since then, ROEs have continued to soar. So it is unlikely that the benefit change fully explains why ROEs are off the charts.

According to Jack Ciesielski, who writes the Analyst's Accounting Observer in Baltimore, the ROE signal is ``muddy,'' or inexact _ but it has always been muddy. It might not measure true profitability precisely. It does suggest that life in corporate America is about as good as it can get.